Promise Healthcare Group and its network of hospitals in Baton Rouge and elsewhere throughout the U.S. filed for Chapter 11 bankruptcy protection Monday and outlined a plan to sell assets and potentially reorganize around it best-performing facilities.
Promise Hospital of Baton Rouge, a 54-bed long-term acute-care hospital in the Baton Rouge Health District, and subsidiaries in Shreveport, Bossier City and Vidalia were included as debtors in the bankruptcy filings, alongside more than 40 other affiliates.
The company has “no current plans” to close any of its Louisiana operations, said Suzanne Sterling, Promise Healthcare’s general counsel. The firm is seeking financing to support operations during the bankruptcy process, which is expected to take six months.
“Importantly, we do not expect substantial changes for our physicians, employees and patients, nor any interruption of care at any of our facilities,” the company said in a statement.
The Boca Raton, Florida-based company operates several short- and long-term acute-care hospitals and skilled nursing facilities across nine states, including Louisiana. The company said it is one of the largest standalone providers of long-term acute-care services in the country.
The company’s debt swelled in recent years after changes to Medicare led to sinking reimbursement rates, and company leaders turned to new business projects that the firm later abandoned, according to court records. The firm posted a $5.2 million operating loss in fiscal year 2016, and a $25.2 million loss in fiscal year 2017.
The firm plans to either sell off its assets or restructure around high-performing facilities with a new equity sponsor, according to court filings.
Earlier this year, Baton Rouge General ended a deal with Promise Hospital of Baton Rouge to provide acute inpatient rehabilitation care and skilled nursing services at BRG’s Mid City campus on Florida Boulevard, Baton Rouge General spokeswoman Katie Johnston said, though the hospital maintains a “good working relationship” with Promise.
“Since then, our (skilled nursing facility) and rehab units have been managed by the BRG team, offering the high quality care BRG is known for,” Johnston said.
It is not clear when or why BRG ended its management agreement with Promise. Louisiana Department of Health spokesman Robert Johannessen said facilities are required to notify the agency before closing, but said the Promise entity on Florida Boulevard did not do so ahead of time.
Johannessen said the department is not aware of any other locations closing.
Danny Brown, who serves as Promise Hospital of Baton Rouge’s landlord for its Mancuso Lane facilities, said the company is doing well locally, but is faced with poorly-performing locations in other states.
“I don’t see any problem with them continuing to operate the Baton Rouge facility,” said Brown, who is listed as a creditor in bankruptcy filings. “They’re still open, still very profitable. They’re doing well.”
Promise Hospital of Ascension is also listed as a debtor in the bankruptcy filings. That subsidiary formerly ran a 54-bed transitional care hospital on Worthey Road in Gonzales before consolidating to Promise’s Baton Rouge offices.
In 2016, a federal probe from the U.S. Department of Health and Human Services’ inspector general claimed Promise Hospital of Ascension improperly billed Medicare for a rare protein deficiency called Kwashiorkor, resulting in nearly $500,000 in overpayments. Kwashiorkor is a form of severe protein malnutrition and mainly affects “children living in tropical and subtropical parts of the world during periods of famine or insufficient food supply,” the report said.
Regulators began the probe into several hospitals after Medicare paid hospitals $711 million for claims that included a diagnosis code for Kwashiorkor in 2010 and 2011.
Promise Hospital of Ascension also was hit with a nearly $1 million judgment in favor of Amerihealth Caritas Louisiana, a company that provides managed-care services for Louisiana’s Medicaid program. The company filed a lawsuit in 2016 in the Middle District of Louisiana.
Amerihealth said in its lawsuit that the hospital was routinely paid double for services and did not return $936,777 in overpayments to Medicaid. Amerihealth Louisiana is listed as a creditor in Promise’s bankruptcy filings as being owed $821,896.
Promise intends to sell off underperforming assets in Los Angeles and St. Louis, as well as real estate assets in San Diego, in the next three months, according to a filing made by the company’s new chief financial officer and restructuring officer. The previous chief executive officer and CFO left in recent months.
The company plans to sell off the rest of its assets, or restructure them if an equity sponsor emerges, by April, wrapping up bankruptcy proceedings within six months.